Carlton/Granada merger should be referred says IPA

Staff,, brandrepublic.com, Friday, 13 December 2002, 4:15pm,

LONDON - The IPA has called for the proposed merger of Carlton Communications and Granada to be referred to the Competition Commission.

In its response to the Office of Fair Trading’s invitation to comment, the advertising and marketing agency group said it has deep concerns over the impact of the merger of the two broadcasters forming a single ITV company, particularly with reference to the creation of a single sales house.

The IPA said that if the merger led to the formation of a single sales house it would potentially create a chain reaction that might provoke the consolidation of the sales activities of the other broadcasters, namely a merger of the sales houses of Five and Channel 4.

The IPA’s submission has been drafted in close consultation with the voice of British advertisers, ISBA.

The key points are:

The creation of a single sales house commanding almost 54% of TV revenues would pose unacceptable risk to the competitive market for air-time sales in the UK.

The continued non-substitutability of ITV for most major advertisers and the consequent dangers, which such a near monopolistic sales venture could hold for television costs.

The risks of retaliation by Channel 4, Channel 5, BSkyB and GMTV in consolidating their own sales operations -- so effectively reducing air-time sales competition in the UK TV market to two players.

Earlier this week ISBA submitted its owns proposals to the OFT.

The concerns of the two are real. Carlton and Granada are known to want to propose a single ITV sales house in their merger submission to the Office of Fair Trading. The proposal is currently being driven by Granada's Charles Allen and Carlton's Michael Green.

It would enable the companies to generate £20m of savings but will raise fears over ITV's monopoly position. Observers have suggested Granada, which is the dominant player in the merger, is simply trying its luck. But the news has concerned agencies and advertisers.

Jim Marshall, the chairman of the IPA media policy group, said recently: "The IPA is surprised and disappointed they've taken this view. There has to be competition. If we can't be assured of a competitive market, we'll oppose the merger."

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